PLUNKETT HOMES (1903) PTY LTD and O'SHEA - [2011] WASAT 67

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: BUILDERS' REGISTRATION ACT 1939 (WA)

CITATION: PLUNKETT HOMES (1903) PTY LTD and O'SHEA [2011] WASAT 67

MEMBER: MR M SPILLANE (MEMBER)

HEARD: 10 MAY 2010 & 21 JULY 2010, DECISION RESERVED 21 SEPTEMBER 2010

DELIVERED : 18 APRIL 2011

FILE NO/S: CC 1652 of 2009

BETWEEN: PLUNKETT HOMES (1903) PTY LTD
Applicant
AND
BRIAN TIMOTHY O'SHEA
MAREEBA ALICE WILSON
Respondent

Catchwords:

Application for leave to review decision of Building Disputes Tribunal - Whether damages flow naturally from event - Whether reasons adequate

Legislation:

Builders' Registration Act 1939 (WA), s 12A(1)

Result:

Application for leave granted

Category: B

Representation:

Counsel:

Applicant: Mr A Buchan
Respondent: Selfrepresented

Solicitors:

Applicant: Hotchkin Hanly
Respondent: Self-represented

Case(s) referred to in decision(s):

Commodore Homes (WA) Pty Ltd and Deegan & Anor [2007] WASAT 45
Hadley v Baxendale (1854) 9 Ex 341
Makita (Australia) Pty Ltd v Sprowls (2001) 52 NSWLR 705
Mt Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149
Multiplex Constructions Pty Ltd v Abgurf Pty Ltd (unreported, NSWSC, Library No 55042, 1992)
Ng v Peter Stannard Homes Pty Ltd, Complaint No 16906/1-4
Pollock v Wellington (1996) 15 WAR 1
Simpson v Plunkett Homes, Complaint No 0.16931
Tangent Nominees Pty Ltd and Edwards [2005] WASAT 119
Well Holdings Pty Ltd v Agostino [2001] WADC 174
Wilson v Metaxas [1989] WAR 285
Wing Luck Foods v Lay Choo Lim [1989] WAR 358

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The builder sought leave to review a decision of the Building Disputes Tribunal ordering payment to the owner of $25,951.00 in respect of delay in completing a building contract.
There were five grounds of review, the first of which claimed that the damages did not flow naturally from the delay.
The second ground claimed insufficient reasons for the Building Disputes Tribunal's decision and the third objected to the reliance placed on the expert's evidence which they claimed was unreliable.
The fourth and fifth grounds dealt with how the amount of damages had been calculated.
The Tribunal found that the decision by the Building Disputes Tribunal was attended with sufficient doubt in respect of Grounds 1, 3, 4 and 5, and granted leave on those grounds but refused leave on Ground 2.

Introduction

Plunkett Homes (1903) Pty Ltd (applicant, builder) and Mr Brian O'Shea and Ms Mareeba Wilson (respondents, owners) entered into a building contract for the construction of a residence at No 9 Ennerdale Boulevard, Waikiki, on 20 December 2004.
Although the contract required practical completion to occur on 27 January 2006 it was agreed before the Building Disputes Tribunal (BDT) that practical completion did not occur until 7 November 2006.
The owners issued a complaint in the BDT against the builder on 15 June 2006, claiming amongst other things, damages for the delay in completion of the contract.
The matter was heard before the Building Disputes Tribunal on 17 and 20 June 2008 with reasons published and orders issued on 29 September 2009 including an order that the builder would pay the owners the sum of $25,951.
On 21 October 2009, the BDT varied its orders by consent as follows:
Order to Pay No 53/2009-10 to be varied to provide 'that Plunkett Homes (1903) Pty Ltd pay to Hotchkin Hanly Lawyers the sum of $25,951 to hold in an interest varied account pending the determination of the State Administrative Tribunal's review of building dispute complaint number 0.17023, with the local authority that the principal interest will be distributed to the party successful in that review application brought before the State Administrative Tribunal.
On 22 October 2009, the builder filed an application for leave to review the decision of the BDT which is the application the subject of this decision.

Application for leave

The papers provided to this Tribunal by the BDT for the application for leave included:
a)The BDT hearing bundle dated 19 December 2007 comprising folios of 1 to 99
b)The BDT hearing bundle dated 17 June 2008 and 20 June 2008 comprising folios 1 to 88
c)The BDT Order to Pay No 53/2009-10 dated 29 September 2009
d)Reasons for decision of the BDT dated 29 September 2009
e)BDT Order to Pay No 53/2009-10 dated 21 October 2009 with attached consent orders
f)BDT Exhibit 1 - house plan sheet 2 of 7.
g)BDT Exhibit 2 - elevation plan sheet 3 of 7
h)BDT Exhibit 3 - kitchen, bathroom and laundry plan sheet 5 of 7
i)BDT Exhibit 4 - letter from Mr Greg Granger to Mr Daniel Maurice dated 18 December 2007
j)BDT Exhibit 5 - construction time table
k)Transcript of hearing before the BDT dated 17 June 2008
l)Transcript of hearing before the BDT dated 20 June 2008
The builder set out its grounds of review in the application filed with the Tribunal on 22 October 2009 and on 19 January 2010, amended those grounds, which are set out later under the applicant's submissions.
The application for leave was heard on 10 May 2010 and 21 July 2010 and on 21 September 2010, this Tribunal reserved its decision.

Applicant's submissions

In addition to the application for review, the builder filed written submissions dated 3 May 2010 and at the hearing, counsel for the builder made further oral submissions.

Grounds of review

The grounds of review set out by the builder, contained both contentions and submissions in respect of each ground. For purposes of completeness those grounds are now set out in full:
1.That the BDT erred in law in finding at paragraph 35 of its written reasons for decision of 29 September 2009 ('BDT Reasons'), that rental income foregone on the Respondents' pre-existing dwelling, as a result of delays to completion of the home under construction, were damages that flow naturally from the Applicant's breach as:
1.1The claim for rental income foregone on the Respondent's pre-existing dwelling was not a loss that arose naturally or according to the usual course of things from the breach of the building contract and was therefore not properly claimable against the Applicant.
1.2The BDT should properly have followed the earlier BDT decisions of:
1.2.1Simpson v Plunkett Homes complaint no. 0.16931 delivered 19 May 2008; and
1.2.2Ng v Peter Stannard Homes Pty Ltd complaint no. 16906/1-4 delivered 1 May 2008 (which was affirmed by the SAT on review in CC 995 of 2008 on 22 December 2008, unreported);
which decisions found that damages for loss of rental income which occurred during a contract overrun period were not a loss that flowed naturally from the breach of contract within the meaning of the first limb of the test in Hadley v Baxendale (1854) 165 ER 145.
1.3The findings by the BDT in Simpson supra, regarding the application of the rule in Hadley v Baxendale supra were not obiter dicta as found by the BDT at paragraph 40 of the BDT Reasons.
1.4The BDT failed to take account of the sale of the Respondent's pre-existing dwelling in June 2006.
2.Following a hearing over a period of two days and having taken in excess of 16 months to deliver its decision, the BDT erred in law in failing to provide adequate reasons for finding:
2.1at paragraph 14 of the BDT Reasons that Mr Granger's failure to consider the addenda to the specification did not make his assessment unreliable; and
2.2at paragraphs 39 and 40 of the BDT Reasons that the BDT decision in Simpson supra was distinguishable and not binding on the BDT.
3.The BDT erred in fact by accepting the evidence of Mr Granger when:
3.1in cross examination Mr Granger conceded that he had failed to consider the specific circumstances relating to the construction of the subject property when undertaking his assessment of the time at which progress claims would have fallen due had the home been constructed within the timeframe permitted under the contract.
4.The BDT erred in fact and law when finding at paragraph 16 of the BDT when finding at paragraph 16 of the BDT reasons that the sum of $13,125.00 was an appropriate measure of the Respondent's loss for overpaid interest and the Respondent was entitled to be paid damages in that amount in addition to rental income forgone when:
4.1there was no evidence before the BDT that the Respondents intended to repay the construction loan in the immediate future;
the interest payments of $13,125.00 would have been payable by the Respondents in any event and irrespective of any delay on the part of the Applicant;
4.2the BDT awarded damages based on the loss of rental income from the Respondent's previous residence; and
4.3the award of both foregone rental income and 'additional interest' compensated the Respondent's twice for the same underlying loss and damage.
5.... Further or alternatively to Ground 1 hereof the BDT erred in fact and law in finding that the complainant suffered the loss and damage assessed and should properly have taken into account:
5.1the rental income the Respondents would have earnt [sic] on their pre-existing property up to 7 November 2006; and
5.2the interest the Respondent would have paid on their construction loan UP to 7 November 2006, if the preexisting house had not been sold; and
compared this to:
5.3the rental income the Respondents actually received from their pre-existing home; and
5.4the interest the Respondents actually paid up to 7 November 2006.
The applicant's written and oral submissions expanded further on the issues raised in the grounds of review.

Respondent's submissions

Ms Wilson, the second respondent, appeared before this Tribunal at the initial directions hearing. However, on 10 May 2010, the day that the matter was listed for final hearing, Ms Wilson did not appear and could not be contacted.
The applicant's case was based solely on legal argument. To avoid incurring unnecessary cost, the Tribunal allowed the applicant to present its case and make its submission on 10 May 2010 following which, the following orders were made:
1.The matter is part heard and will be adjourned to 21 July 2010 at 10 am to await the respondents' reply to the invitation contained in Order 2.
2.The respondents will be furnished with a copy of the transcript of the hearing of 10 May 2010 and must on or before 11 June 2010 notify the Tribunal and the applicant if they wish to make submissions in respect of the matter and whether those submissions will be oral or in writing.
Nothing was received from the respondents, but on the adjourned date, 21 July 2010, Ms Wilson did appear and confirmed that she had received a copy of the transcript and stated:
I'm not going to make any further submissions … - I believe that all our evidence was provided within the first building tribunal … (T:3, 21.07.10)
The matter was then adjourned to Tuesday, 21 September 2010 to allow time for any questions or clarification. None being raised, the decision was reserved on 21 September 2010.

Consideration

The principles to be considered for the granting of leave have been set out by this Tribunal in Tangent Nominees Pty Ltd and Edwards [2005] WASAT 119 (Tangent).
That case recalled previous decisions of the Supreme Court in Wilson v Metaxas [1989] WAR 285; Wing Luck Foods v Lay Choo Lim [1989] WAR 358 and the District Court in Well Holdings Pty Ltd v Agostino [2001] WADC 174.
The principles set out in Tangent confirm that generally speaking, this Tribunal should be slow to grant leave. For leave to be granted, it must be shown that there is no discernable basis for the decision on review or there is a significant question of law, or that that decision is wrong or attended with sufficient doubt. Further, it must be demonstrated that if the decision were not to be reversed a substantial injustice will result.

Ground 1

In this ground, the builder submitted that the BDT erred in finding at [35] of its written reasons that rental income foregone on the respondents' pre-existing dwelling as a result of delays to completion of the home under construction, were damages that flow naturally from the applicant's breach.
At [33] - [36], the BDT stated:
33.The Tribunal is also prepared to accept as an appropriate measure of the value of that loss, the value of the lost opportunity to rent premises owned by them at the time the contract was entered into on the basis of an acceptance of the Owners' evidence that it was their intention to rent those premises on completion of the residence under construction.
34.If it could ever have been said that a Builder was entitled to assume that an Owner in contracting for the construction of a residential dwelling would suffer no loss beyond the inconvenience of the delay in occupation of the premises during any contractual overrun, those times have long since passed with it now not being uncommon for couples to own two, three or even more homes during the course of their joint lives.
35.The Tribunal accepts the Owners' contention that rent forgone as a result of an Owner's inability to move in to a residential dwelling at the time provided for in the building contract are damages that naturally flow from the Builder's breach. It should be clear to a Builder who fails to complete a building that is intended to be occupied by the Owner that if the Owner is unable to move in to a completed dwelling at the time provided for in the contract that Owner will, if renting, be forced to pay additional rent during any delay in the completion and if the Owner of an existing residence will forego the opportunity to obtain rental income from an existing residence during the period of the delay in completion of the contract.
36.The Tribunal is satisfied that compensation equivalent to the lost opportunity to rent their premises at 5 Herron Way Yangebub [sic] is appropriate to put the Owners in the position they would have been had the Builder complied with its contractual obligation to complete the construction within 200 working days.
Of the total sum of $25,951 awarded to the respondent by the BDT, the sum of $9,000 was specifically identified at [37] of the reasons as being the '... total value of the lost rent during the overrun period ...'.
The issue of rent being awarded as a measure of damages has been discussed in a number of texts and commented on in a number of decisions.
In Hudson A, Hudson's Building and Engineering Contracts (11th ed, 2004) (Hudson) in volume 1 at page 8.162, the author states:
... In the absence of such clauses, the normal Hadley v. Baxendale rules of remoteness will apply in the assessment of the owner's loss of caused by delay in completion.
The measure of damage in the event of such delay will be largely governed by the type of project undertaken. If the works involve a commercial building, such as a factory or shop, it will usually be evident that delay in completion will be likely to affect or postpone the profits the owner is likely to earn from his use of the building. In the case of a block of flats it may be equally obvious, for example, that a prospective landlord's receipts of rent will be postponed, and he may also have incurred liabilities under agreements with prospective tenants ...
It has recently been suggested in New South Wales that loss of profit or rents will not necessarily be recoverable under the first branch of the rule in all commercial projects, and that increased cost in the form of the additional 'holding' or financial charges of the owner during the period of delay are to be preferred as the measure of damage under the first branch of the rule.
In the case of an ordinary dwellinghouse it may not, on the other hand, be evidence that it will be let by the owner, and if he wishes to recover the loss of profits from letting or from taking in lodgers, for example, he may have to satisfy the requirements of the second branch of the rule in Hadley v. Baxendale by showing that these prospective earnings had been within the contemplation of the contractor at the time of contracting. However, in the case of factories, shops, flats and other obviously profitearning projects, the damages for loss of profit are likely to arise under the first branch of the rule, as occurring naturally in the usual course of things from the breach ...
And later in 8.164, the author further states:
Thus in general, under the first branch of the rule in Hadley v. Baxendale, normal or reasonable profits may be recovered for delay in completion of what are obviously profitearning building or engineering projects, or a reasonable figure for inconvenience and loss of business.
In the case of an apparently ordinary dwellinghouse required for personal occupation, damages recoverable within the first branch of the rule would include, it is submitted, the reasonable cost of living accommodation or living elsewhere and storing furniture, etc., if in fact expenses of this kind were incurred, but not loss of rent from lodgers or paying guests, unless this had been brought to the attention of the builder in some way at the time of contracting. ...
In the matter of Ng v Peter Stannard Homes Pty Ltd, Complaint No 16906/1-4 delivered on 1 May 2008, the BDT dealt with a similar claim for rental and disallowed it, stating at [44] - [46]:
44.In contract, an award of damages is governed by the rule in Hadley v Baxendale (1854) 9 Ex 341 at 354. That rule states that where on of the parties is in breach, and the other is seeking damages, the damages must be such[:]
'as may fairly and reasonably be considered as arising in the usual course of things from the breach itself or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it.'
45.Did the loss of rental arise ordinarily in the ordinary course of things? Had the owner been seeking rental expenditure (i.e. the cost of renting alternative accommodation) the Tribunal may well have (in the absence of contrary evidence) made a finding that the loss arose in the usual course of things. A delay in the contemplation of building works will usually require expenditure for alternative accommodation.
46.But the owner is seeking a sum for the loss of income. This would require an awareness on the part of the builder that the property was going to be used for rental purposes, so as to satisfy the Tribunal that the loss had bene in the contemplation of the both parties at the time they made the contract, as the probable result of the breach of it. If the fact that the house was to earn an income had been made known to the builder at the time that the contract was entered into, then the owner is entitled to compensation for the loss of rental income.
That decision came on appeal to this Tribunal as CC 995 of 2008 and in an ex tempore decision delivered on 22 December 2008, Member Hawkins applying the rule in Hadley v Baxendale (1854) 9 Ex 341 (Hadley v Baxendale) upheld the findings of the BDT. Ms Hawkins stated:
Accordingly, on the basis of the evidence before the BDT it was open for it to find that the respondent was not aware that at the time the contract was made the applicant or her father had made known to the respondent or its representative that the intended use of the property was as an investment property. It was open therefore for the BDT to find the applicant had not established that the loss of rental income in this case arose naturally. I therefore do not consider the BDT erred when it dismissed the applicant's claim for loss of rent.
It has been accepted that damages which could be regarded as flowing directly from breaches such as delay would fall within the first limb of Hadley v Baxendale. These would include additional interest paid on a mortgage or rental for an extended stay in alternative accommodation during the time of the delay.

On the other hand, loss of rents as a profit as discussed in Hudson are another matter entirely. As stated by Cole J in Multiplex Constructions Pty Ltd v Abgurf Pty Ltd (unreported, NSWSC, Library No 55042, 1992) at 517:
However, as delayed rental return is the measure of damage from delayed practical completion, there would have to be disclosure of that information to the builder.
In the present case, the Tribunal at [25] of its decision stated:
Counsel for the owners accepted that facts do not bring the case within the second limited [sic] of Hadley v Baxendale and it is conceded that it the owners did not make known to the builder at the times contracted was entered into that they intended to their rent the existing premises when they moved into their new home.
In Simpson v Plunkett Homes, Complaint No 0.16931 (Simpson v Plunkett Homes) delivered on 19 May 2008, the BDT held that a claim for lost rent of a shed/granny flat was not within the first limb of Hadley v Baxendale and upheld the builder's submission that the damages did not naturally flow from the breach and were not within the contemplation of the parties at the time the contract was entered into.
At [40] of its reasons in the present case, the BDT, in referring to that decision, stated that it did not believe itself bound by what it considered 'obiter comments in the Simpson decision'.
As stated at [37], the BDT awarded the owner the sum of $9,000 for the value of lost rent during the overrun period. However, the BDT recognised that the 'lost rent' was not rent paid for alternative accommodation during the overrun period, but rather, lost rent as profits or income that the owner may have made due to what the BDT described as 'the lost opportunity to rent their premises at 5 Herron Way Yangebup [sic]'.
Based on the authority referred to above, it would appear that such lost rent would fall within the second limb of the rule in Hadley v Baxendale and is not an amount that could or should be described on the present state of the law as being an amount that flows naturally from the builder's breach.
Furthermore, even if the BDT did not feel compelled to follow its own previous decisions, it should follow this Tribunal's decision.
As stated by this Tribunal in Commodore Homes (WA) Pty Ltd and Deegan & Anor [2007] WASAT 45 at [20] - [23] under the heading 'Consistency in decisionmaking':
Reviews of the decisions of the Disputes Tribunal are, to this Tribunal, the decisions of which are subject to an appeal to the Supreme Court. Section 42 of the BR Act enables the BDT to state a case on a question of law to this Tribunal.
The administration of the law before the BDT in the exercise of its jurisdiction under the Home Building Contracts Act 1991 (WA) (HBC Act) and the BR Act will become unpredictable, to the detriment of the public interest, if the BDT does not follow the decisions of this Tribunal.
In Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639, President Brennan J of the Administrative Appeals Tribunal, as he then was, stated:
'Inconsistency is not merely inelegant: it brings the process of deciding into disrepute, suggesting an arbitrariness which is incompatible with commonly accepted notions of justice.'
Although the statement was made in a different context, in which intra tribunal decision-making consistency was discussed, it is apt in relation to what has occurred in this matter. By deciding the matter as it has, the BDT has put the parties to unnecessary trouble and expense and the owners were placed at risk of an adverse order as to costs. Even if the BDT considers that a decision of this Tribunal is wrong, it should follow the decision. However, when doing so the Disputes Tribunal may express its doubt, or even a more strongly held dissenting view, together with the reasons for that view. In that circumstance, it lies with the losing party to decide whether to proceed to a review before this Tribunal to persuade the Tribunal to change its view, or if need be, ultimately to appeal to the Supreme Court. In that way, the integrity of the decision-making process can be maintained.
In the circumstances, the Tribunal is satisfied that in respect of Ground 1, the decision of the BDT is attended with sufficient doubt such that the applicant should be granted leave in respect of that ground.

Ground 2 - failure to provide adequate reasons

The applicant raised this ground in respect of two discreet issues within the BDT's decision, the first related to [14] of the BDT's reasons and in particular, the finding that Mr Granger's failure to consider the addenda to specifications did not make his assessment unreliable.
In their written submissions to this Tribunal, the applicant stated:
The BDT is required to provide adequate reasons for the conclusion it reaches. Whether there is a right of appeal, the reasons must be sufficient to give effect to that right. The basis for its decision must be apparent, as otherwise the losing party cannot know where there has been a mistake of law or fact.
In its decision, the BDT set out its findings in relation to Mr Granger's evidence at [12] through to [16] of its reasons for decision.
At [13] and [14], the BDT stated:
13.Granger's assessment of the time to reach each payment milestones was based on his knowledge and experience as a builder and his consideration of the construction drawings of the residence. But he accepted in crossexamination that his assessment did not take into account the particular circumstances relating to construction, his assessment was based upon what he considered to be reasonable times during the construction period to achieve completion within the 200 days allowed by the contract.
14.The Tribunal rejects the Builder's submission to Granger's failure to consider the addenda to specifications made his assessment unreliable. The Tribunal accepts Granger's evidence of the likely timing of claims under the contract and accepts in the absence of any contradictory evidence of the Builder that it is reasonable for the Tribunal to rely on Granger's evidence to calculate the loss that flowed in terms of additional interest payments are the results of the contract overrun.
In its submission outlined above, the applicant was in part quoting from the Full Court of WA in Mt Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149 (Mt Lawley) at [27] where the Court stated:
Where there is a right of appeal, the reasons must be sufficient to give effect to that right. The basis for the decision must be apparent, as otherwise the losing party cannot know whether there has been a mistake of law or of fact. Just what that will involve depends upon the nature of the case. Some cases turn upon a simple contest of credibility between two witnesses. Others involve detailed and complex factual and legal issues requiring close reasoning and analysis.
Having read the crossexamination of Mr Granger and submissions of counsel for the applicant before the BDT, and the interaction and questions put to counsel by the BDT, this Tribunal is satisfied that in the particular circumstances of this case, [13] and [14] of the BDT's reasons, although not lengthy or elaborate, capture the issue in question and explain albeit briefly why the BDT found as it did.
As stated by the Full Court in the Mt Lawley case at [29]:
Inadequacy of reasons does not necessarily amount to an appealable error. An appeal court will only intervene when no reasons have been given in circumstances in which they were required, or when the inadequacy is such as to give rise to a miscarriage of justice ...
That is not the position in this case, although the reasons in respect of Mr Granger's evidence may have been brief, the applicant has been able to formulate Ground 3 in this matter which relates to Mr Granger's evidence and in respect of which it seeks leave.
In the circumstances, this Tribunal is not satisfied that leave should be granted in respect of that part of the BDT's reasons.
The applicant also raised the failure of the BDT to provide adequate reasons for its findings at [40], in particular its comments that it was not bound by what it described as 'obiter comments' in the case of Simpson v Plunkett Homes.
The BDT at [38] and [39] of its reasons dealt with why it believed it was not bound by the findings in Simpson v Plunkett Homes.
The only reference to the matter in the applicant's written submissions is at para 28 where they stated:
Further, in distinguishing a previous decision of the BDT, the BDT should have provided detailed reasons as to why it considered such a decision was distinguishable and not binding on the BDT.
This issue was also raised by the applicant as part of Ground 1 when at para 1.3 of its grounds it stated:
The findings by the BDT in Simpson supra, regarding the application of the rule in Hadley v Baxendale supra were not obiter dicta as found by the BDT at paragraph 40 of the BDT Reasons.
This Tribunal is of the same view in respect of this part of Ground 2 as it is in respect of the first part dealing with Mr Granger's comments. Although brief, the BDT's reasons at [39] and [40] explain why they reached the conclusion they did.
Whether they were right is a different issue. However, leave has already been granted in respect of Ground 1 which will to a large extent cover the issue complained of in the second part of this ground.
In respect of Ground 2, therefore, the applicant has not satisfied this Tribunal that the reasons of the BDT are inadequate to the extent necessary to grant leave.

Ground 3 - acceptance of Mr Granger's evidence

The applicant submitted that the BDT should have disregarded the evidence of Mr Granger on which it based its award of interest.
It further submitted that Mr Granger had conceded in crossexamination, (which was acknowledged by the BDT in its reasons) that he had failed to consider the specific circumstances relating to construction of the owners' residence when he undertook his assessment of the time when progress claims could have fallen due, had the home been constructed by the completion date.
The applicant also submitted that without proper expert evidence, the respondents' claim for interest fails in its entirety.
At T:73 (20.06.08) before the BDT the chair in discussing Mr Granger's evidence with counsel for the builder stated:
... wasn't his evidence on the basis that he's had 20, 30 years of experience in the building industry and that based upon the time of the contract, the 200 working days of the contract, to physically do everything there is to achieve practical completion within that 200 days it would be reasonable to assume this stage by that date, not ... not exactly that date, but around about that timeframe within the 200 day period and ...
Counsel for the builder stated '... I think that's a fair summation of how I understand his evidence ...' and then stated '... and the problem with that is it's not pertinent to this case ...'.
Later at T:74 (20.06.08), counsel for the builder stated:
... it's not appropriate we say for the tribunal simply to do their best when a proper method of calculating, in this case, the relevant dates of those progress claims, is open. All Mr Granger needed to do was look at the specification, look at the addenda and have regard to the nature of the work that was being done. He didn't do that and I think his evidence was he wasn't even provided with those documents by my friend's instructors.
The chairman, at T:75 (20.06.08), put to counsel for the builder:
... the difficulty I have with your proposition is the builder is in breach, the builder has not done what he is contracted to do. Now, if you were to put the evidence before the tribunal to say that the calculation that the owners have provided is fundamentally flawed and this is the method that should be used to calculate the loss then obviously we'd listen to that proposition but if ... if the proposition simply is the evidence just doesn't stack up and therefore it should be totally ignored you're going to have some difficulty convincing the tribunal of that.
Counsel for the builder replied:
... [W]e don't say the method of calculation is fundamentally flawed ... the method that my friend has used is right ...
And at T:76 (20.06.08):
These owners are making a claim for holding costs. Again, we don't dispute they're open, but the owner comes charged with the responsibility of proving its out of pocket expenses ...
... The evidence that expert needs to give needs to be tailored to this contract and he simply didn't do that ...
The chair put to counsel for the builder at T:77 (20.06.08):
So we are left with the hypothetical needing to be established.
... the owner has brought along a witness who has said 'relying on my expertise my assessment of the stages of the contract are A, B, C, D and E and in the absence of the builder coming along with any contradictory evidence why should we not accept that evidence?
Counsel for the builder:
It's not appropriate for that expert[,] Mr Granger[,] to purport to give evidence about the hypothetical progress claim dates without having regard to this contract because it's the hypothetical progress claim dates that would have been rendered in this contract, not something where the ... purported expert says well a 200 day contract ...
...
... requiring this builder to perform these works[,] [ie] the works in the specification in the addenda, and by virtue of all of that[,] the progress claims should have been reasonably been rendered on these days.
...
That's where he's fallen down, in our submission, he hasn't had regard to the matters he should have had regard to [ie] the works under this contract ...
...
... in formulating those hypothetical progress claim dates.
The chairman put to counsel for the builder:
... he's been provided with plans, he says in his experience there is nothing in those plans that makes this contract extraordinary to the extent that his opinion on the staging within the 200 days completion date would warrant any significant adjustment of the dates that he's provided.
Counsel for the builder replied:
That's where he falls down we say, that's his evidence.
...
He can't say there's nothing extraordinary in this contract that warrants me changing my view when he hasn't looked at the contract. He hasn't looked at the specification in the addenda to work out whether there is something that he needs to take account of ...
In finishing in this matter, counsel for the builder stated:
... no dispute about Mr Granger's qualification in that regard, to give that type of evidence. They've approached the question correctly.
The chairman:
You just say they haven't given enough material to ...
Counsel for the builder:
Hasn't done it adequately.
...
And what that does is it undermines the very figure of 4[,]715 that's been put and what that of course does is it undermines by virtue of that the figure that's claimed 13[,]125 because if you haven't got the 4[,]715 right ...
...
... you don't get the 13[,]125 right.
The applicant referred the Tribunal to a number of cases in respect of this issue and in particular, comments of the Full Court of the Supreme Court of Western Australia in Pollock v Wellington (1996) 15 WAR 1 at 3 in respect of expert evidence and conditions in which it is admissible. In that matter, the Court stated:
Before an expert medical opinion can be of any value the facts upon which it is founded must be proved by admissible evidence and the opinion must actually be founded upon those facts ...
As with any other evidence, expert opinion must be comprehensible and the conclusions reached must be rationally based. A court ought not to act on an opinion, the basis for which is not explained by the witness expressing it ...
In the case of Makita (Australia) Pty Ltd v Sprowls (2001) 52 NSWLR 705 at 743, the Court of Appeal of New South Wales stated:
... [T]he opinion proffered must be 'wholly or substantially based on the witness's expert knowledge'; so far as the opinion is based on facts 'observed' by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on 'assumed' or 'accepted' facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached ...
In the present case, the applicant submits that there were relevant facts particular to this case available, which were not supplied to the expert prior to him providing his opinion.
At [13] of its reasons dealing with Mr Granger's evidence, the BDT stated:
... [While] he accepted in crossexamination that his assessment did not take into account the particular circumstances relating to construction, his assessment was based upon what he considered to be reasonable times during the construction period to achieve completion within the 200 days allowed by the contract.
And at [14]:
The Tribunal rejects the Builder's submission that Granger's failure to consider the addenda to specifications made his assessment unreliable. The Tribunal accepts Granger's evidence of the likely timing of claims under the contract and accepts in the absence of any contradictory evidence from the Builder that it is reasonable for the Tribunal to rely on Granger's evidence to calculate the loss that flowed in terms of additional interest payments as a result of the contract overrun.
The BDT then went on to calculate the amounts based on those findings.
In the hearing before the BDT, counsel for the builder accepted Mr Granger's qualifications and the method by which he had undertaken the task but submitted that his failure to take available facts specifically relevant to the case into account, which may have influenced his view of the matter in respect of which he was asked to form an opinion, made his opinion unreliable.
As stated by, counsel for the builder:
It's not appropriate for that expert[,] Mr Granger[,] to purport to give evidence about the hypothetical progress claim dates without having regard to this contract because it's the hypothetical progress claim dates that would have been rendered in this contract, not something where the ... purported expert says well a 200 day contract ...
...
That's where he's fallen down, in our submission, he hasn't had regard to the matters he should have had regard to [ie] the works under this contract ...
In a letter dated Tuesday 18 December 2007 to solicitors for the owners, and marked Exhibit 4 by the BDT, the expert, Mr Granger, had stated:
The following points should [sic] were considered in arriving in my opinion:
...
5.As I was not provided with a full set of specifications or addenda, I have assumed double brick construction (exterior face) with float and set internal walls.
It would appear that if Mr Granger had taken into account the addenda referred to when reading his opinion, the builder would have had no objection to the conclusion reached. But, because he did not, the builder submits that the conclusion reached by the expert should not have been relied on by the BDT.
The calculation of interest in respect of which damages were awarded by the BDT was calculated relying on the evidence of Mr Granger and it is therefore an important issue.
Whether the applicant's claims are correct remains to be seen, however, the reasons of the BDT in respect of this matter are brief and the issue is attended with sufficient doubt for leave to be granted. Furthermore, substantial injustice may result if the applicant does not have the opportunity to have this issue reviewed. In the circumstances, leave will be granted on this ground.

Ground 4 and Ground 5

The final two grounds in respect of which leave is sought relate to how the amount awarded to the owners was calculated.

In Ground 4, the builder submits that the $13,125 awarded in respect of interest was incorrectly calculated on the basis that there was no evidence before the BDT that the respondent intended to repay the construction loan and that the interest payments were payable by the respondents in any event.
Ground 5 was put forward as an alternative to Ground 1. In it the builder argued that by granting the owner damages for the loss of rental income and at the same time interest for the time the building was not completed, the owner was being compensated twice for the applicant's breach.
On a careful examination of all the documents and evidence before the BDT available to this Tribunal sufficient doubts are raised in respect of both these issues and depending on the findings in respect of Ground 1 and Ground 3, the calculation of damages may need to be examined in any event.
In the circumstances, to allow all matters relating to the proper calculation of damages to be considered, leave will be granted in respect of both of these grounds.

Conclusion

For the reasons outlined above, leave will be granted in respect of Grounds 1, 3, 4 and 5, but refused in respect of Ground 2.
It is clear from comments made by counsel for the builder before the BDT that it was common ground that there had been a breach by the builder, but the issue to be determined by the BDT was to assess what damages, if any, the owners were entitled to by virtue of that breach.
If it had been possible, this Tribunal would have determined the matter finally, however, submissions are necessary on a number of issues. The matter will therefore be listed for further directions to allow the parties to address the Tribunal on the matter.

Orders

1.Leave is granted in respect of Grounds 1, 3, 4 and 5.
2.Leave is refused in respect of Ground 2.
3.The matter will be listed for further directions.

I certify that this and the preceding [94] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR M SPILLANE, MEMBER